Transit TIF Districts Pass State House and Senate, Would Fund CTA Projects

The CTA wants to modernize the Blue Line’s Congress branch, and onedesign some of the stations and possibly reopen some closed entrances at single-entry stations. Image: CTA

A new bill that would generate more funding for four large-scale Chicago transit infrastructure projects, without diverting tax revenues from schools, passed the Illinois House and Senate today. The original bill was introduced in January 2015, spearheaded by the Metropolitan Planning Council. It awaits Governor Bruce Rauner’s signature, who is expected to sign a budget today after a year of operating the state without a budget for a year – reducing funding for transit agencies, schools, and social services.

The funding would come from “transit TIF districts” that would have boundaries extended up to a half mile around Chicago’s Union Station (to fund the changes in its master plan), the CTA’s North Side Main Line, the CTA’s Red Line extension, and the CTA’s Blue Line Congress branch modernization and possible extension. The bill (pdf) enables the Chicago City Council to pass a similar law to create the actual districts, but sets limits on how far the districts can extend from the proposed projects’ area.

They would work much like existing TIF districts, where the property taxes assessed on any incremental increase in property values since a district’s inception is deposited in a separate fund. This is a form of value capture in that an increase in property values spurred by the transit infrastructure is used to help pay for it.

Other key differences are that the transit TIF districts would expire in 35 years instead of the originally-proposed 50, and that instead of a blanket maximum length of six miles, each district has a specific maximum length. Fifty years was proposed because that is the useful life of a transit facility.

The most important difference between common TIF districts and the transit TIF districts is that the new transit TIF district doesn’t divert any money from schools. The legislation says that any school district overlapping the transit TIF district will receive all the money due to it as if the transit TIF district didn’t exist.

After making the payment from the transit TIF district fund to the school district, 80 percent of the remaining portion would go to pay for the transit project, and 20 percent of the remaining portion would go to all other taxing districts – library, city colleges, etc. – in the proportions as if the transit TIF district didn’t exist.

Mayor Rahm Emanuel issued a statement about the bill’s passage in the state House and Senate, saying, “Today marks the next chapter in the work we started shortly after I took office, to modernize the Red Line from 95th to Howard” and building the extension to 130th Street. “With this bill,” it said, “in just a few years we will have done what once seemed impossible.”

Metropolitan Planning Council vice president Peter Skosey said they worked closely with Illinois state senator Heather Steans (7th) and Illinois state representative Ron Sandack (81st) to pass the bill. He echoed Emanuel’s statement and said, “This effort is essential to financing long sought improvements to the CTA’s system and matching federal transit grants available to do that work. Without the funds created by this value capture bill, I cannot see how these projects would proceed.”

After Rauner signs the bill, then the City Council can start the hard work to create an ordinance that gives them this new transit-funding TIF district. These transit TIFs would generate millions of dollars that the CTA could use as the required local match to federal funds necessary to build or rebuild important transit facilities – and without diverting money from Chicago Public Schools.

If the increase in property values does not go to the current users of the tax income, then those users fall behind in their own inflation driven costs. So again, without a tax increase, who is the money being taken from?

A portion of the tax increase DOES go to the current users of the tax income.

The Chicago Public Schools receive their share as if the TIF didn’t exist. Then, of the remaining portion the transit project expenses get 80% and the library and other taxing districts get 20% according to the pre-existing proportions.

Normal channels of funding the city are are getting in the way of current priorities. A new channel is created to get around the normal ones. If they improve the city enough to attract people who can afford to pay higher taxes then everybody wins. Well everybody but those who can no longer afford to live in the new improved city. Well actually the city is big enough that special places can be designed for the extreme poor and struggling ex-middle class. And anyway income inequality is a national political-economic problem not solvable at the local level (well short of sovereignty that is.) So in the meantime we will have to make do with shell games.

I’m sorry, I am getting way off-topic. This is great idea to funnel more funding into transit. It might actually work well. Getting people out of the expensive private automobile trap frees up money to fund both schools and transit.

Seems like they’ve really gutted the revenue source for this mechanism, so you have to wonder how much increment this will actually generate.

Working off the City’s current data, the Michigan/Cermak TIF generated $1.37 in increment in 2014. Under the structure of Transit TIFs, this figure would be reduced to $550,000 a year – that is just $19 million over the course of the 35 year life or, if you prefer, $31 million less than was required to construct the McCormick Place Green Line station. Yes, this TIF is on the small side but the increment potential in the South Loop is far, far greater than in the Red Line extension area.

I’d need to do some more research to come to a final opinion. My gut says that while this is a useful financing tool, it probably won’t usher in a golden age of transit in Chicago. Also, I’m very much not sold on the wisdom of introducing yet another program that diverts taxes from the City’s general obligation pool. These types of long-term projects are the exact thing that the City should be issuing bonds for.

dr

My understanding is that these are targeted at securing matching-dependent federal funds for specific projects. So, I wouldn’t expect a golden-age, merely a secure funding mechanism for guaranteeing forward progress on already planned projects.

The Cermak station received $4 million in “standard” TIF funding, assistance.

The law allows for the Chicago City Council to convert part of an existing standard TIF district that’s in the boundary around one of the 4 transit facilities listed into a transit TIF district. However, I don’t know what happens to money already deposited in that TIF’s account.

Anton Cermak

That’s incorrect. The Cermak station was fully TIF funded, as was the Morgan Street stop. I had previously seen the IGA and transfer of funds approvals from Council but can’t find them now.

My interpretation of that rule was that the the Transit TIF could only be applied as an “extension” of the TIF once it expires, meaning it would capture the increment from years 25-35. Need to read the amendment again to be clear on the ins and outs though.

Anton Cermak

Well – doesn’t that already happen with the existing TIF districts? The biggest change here then is the decoupling of CPS revenue the increment calculations. If there is merit to that concept, why is it being limited to just this application?

I don’t want to be a downer here – this could be a good thing. It just seems like it was pushed without consideration to the broader policies and governance of TIFs in general.

Anton Cermak

Reading the amended act, it seems as though there likely will be a significant amount of funding. For the north branch of the Red Line, there would be 8.5 square miles of area to collect increment – that’s a huge swath of the City. In fact, that’s a little disquieting to think how flat the City’s revenue will be if the whole of these funds are diverted to this taxing body.

ardecila

Maybe, but I’m incredibly bearish on the city ever getting Federal grants for many of these projects. The numbers for the North Red project probably check out, but the Red Line Extension is frankly uncompetitive compared to other projects nationally. The Blue Line rehab isn’t eligible for Federal funding at all. North Red is ONLY eligible because of projects like Wilson’s express platforms and the Clark Flyover that increase overall capacity.

Union Station is another one that’s probably not eligible for Federal grants.

…and there would be that much more money available for the upgrades. Which means that either more upgrades could be pursued or everyone’s taxes would have to go up by a lesser amount to accomplish the planned upgrades.

So — this was June. Any updates? It’s not like Rauner signed an ACTUAL budget.

FlamingoFresh

Why is it outlandish to think people beyond a half mile boundary will also benefit from these transit improvements? I’m sure people greater than a half mile away from transit still use it. They should be included. Creates a larger pool for funding in a city strapped for funds.

Alderman Michelle Smith (43rd) thinks that improvements to the North Side Main Line (Red/Purple/Brown between Belmont and Howard) are not useful to Lincoln Park/43rd Ward residents. This is preposterous.

The Brown Line’s service quality should improve as a result of the Belmont Flyover, and there are several Brown Line stations in the 43rd Ward.

As a former lifelong resident of the 43rd, I can tell you that most aldermen there, historically, have not viewed the El as something their constituents use.

Well, not their constituents that matter.

Some brown folks who happen to LIVE in the 43rd, yes, but not actual CONSTITUENTS …

Carter O’Brien

Ah, you missed Bill Singer’s run. I remember my mom telling me how shortly after moving to Chicago in 68 she met this progressive candidate for alderman in Lincoln Park, volunteered for his first campaign and he won. I thought she was totally pulling my leg. Needless to say, he turned out to be a bit of an outlier.

I understand that she’s defending her Ward from tax heights from property reassessments but either she’s clueless of its impact or lying. Either or should be a red flag when they are a representative of the public.

FlamingoFresh

Sounds like these Aldermen haven’t got the memo that public transit is more sustainable in the long run than personal use vehicles. I believe their agenda should be voicing the importance of public transit to their constituents. It would make sense considering isn’t that loosely what the City and its government trying to promote. It’d be nice if local government could be on the same page when it’s something that doesn’t deal with their pay raise.

When most of their constituents either are primarily car users or don’t really know how to communicate with their alderman (renters, college students), well. The alderman is going to care more about cars.

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